Current Development Status and Future Strategic Planning Report of Polkadot

Introduction

Hello to all friends concerned about Polkadot. As a team that has been researching Polkadot for nearly five years, we have noticed that there has been an increasing amount of discontent within the community recently, which is something we do not wish to see. With the recent launch of OpenGov for Polkadot, we see that governance power is increasingly being handed over to the community, and we can become a force to drive the development of Polkadot. Therefore, we have decided to shift from a passive research role to an active participation role. This article is a Polkadot Growth Strategic Planning Report that outlines how we believe Polkadot should grow, and many of the viewpoints presented are the results of our years of research.

This article will directly refer to the market rather than just the technology and ideals. We face the most real issues directly and propose ideas and suggestions for improvement. Of course, we also see that many teams are actively proposing solutions to some current problems of Polkadot in the official forums and communities. However, these solutions often target a single issue and do not address the problems comprehensively from a broader perspective, or solve multiple issues uniformly under a strategic thought system.

We welcome everyone to point out any shortcomings in this article, and we also welcome you to generously provide guidance and propose feasible suggestions for improvement as much as possible. Our only hope is to make Polkadot better, so let's work together.

The Current Status of Polkadot

In the past six months, Polkadot has made significant progress, successfully achieving two important milestones in its Roadmap. Among them, the launch of OpenGov introduced an advanced governance model, providing community members with broader participation and decision-making power; the release of XCM V3 improved the messaging format, enhancing Polkadot's functionality and interoperability, laying a solid foundation for future development.

The infrastructure of the Polkadot network remains strong, and the level of developer activity has significantly increased. It currently ranks first among public chains, with the total number of developers rising to second place. This indicates that the number of developers attracted to Polkadot is continuously growing, and their contributions to its technological ecosystem are also on the rise.

However, despite achieving remarkable progress, Polkadot still faces some challenges. The price of the DOT token is unstable and has significant fluctuations, which may bring some uncertainty to investors and ecosystem builders. At the same time, user activity has declined, ecosystem project development is sluggish, and there are some urgent governance issues in the treasury that need to be addressed.

Overall, Polkadot is on a continuous path of innovation, but it has also been facing challenges.

1. Technical Update Status

Polkadot has been committed to continuously improving its technology and features. In the first half of this year, Polkadot has achieved two significant technical updates, releasing OpenGov and XCM V3 on June 15. Currently, Polkadot has officially completed version 1.0, and at the end of June during Polkadot Decoded 2023, Dr. Gavin presented the vision for Polkadot 2.0.

OpenGov: A new governance model introduced by Polkadot, achieving decentralization through community voting and checks and balances, adopting a structured implementation lifecycle. The Technical Fellowship has replaced the old technical committee and acts as a developer DAO.

XCM V3: As the latest version of the cross-consensus messaging format, XCM has been launched for application on Kusama through governance. The release of XCM V3 brings innovative design, supporting features such as external network bridging, NFT transfers, and asset locking.

With the full delivery of Polkadot 1.0, Polkadot will enter a new stage of development. Polkadot 2.0 is a multi-core computer that will shift from a chain-centered to an application-centered approach, introducing several brand new concepts and technologies.

• Accord: A voluntary treaty across multiple chains, where chains voluntarily comply with the treaty and ensure its faithful execution. In the process of implementing Accord, Polkadot introduced two key technologies: SPREE and Project CAPI.
• SPREE Technology: Runtime logic fragments based on relay chains, acting like a secure tunnel to ensure safe transmission of information and value between different parallel chains.
• Project CAPI: A middleware project aimed at promoting the development of decentralized applications (DApps) based on Polkadot. It provides developers with a lightweight client solution, enabling them to create cross-chain applications with a good user interface.

In the vision of Polkadot 2.0, Polkadot reiterates its commitment to creating a resilient application platform. Polkadot will focus on building a ZK primitives library, with the first library nearing completion, which will provide privacy protection for on-chain fellowship. Polkadot will also invest in updates for various technologies including Hermit Relay, Smoldot light client, Sassafras consensus, and Internode Mixnet.

In addition, technologies such as parallel threads developed by Parity, system parallel chains, and asynchronous support are also being fully supported and are yet to be implemented.

2. On-chain situation

As of the writing of this article, according to Messari's report on Polkadot for the second quarter of 2023, the on-chain progress of Polkadot has experienced some ups and downs. Below is a brief overview of the on-chain situation of Polkadot in the second quarter.

Development activity status:

• The developer participation of Polkadot and Kusama has maintained a good upward trend, reaching peaks of 613.71 and 600.29 active developers on May 28 and June 16, respectively.
• The number of core active developers reached a historical high of 181 on March 22 and has remained relatively stable.
• Polkadot has the highest number of submissions in terms of protocols and ecosystems, as well as the highest number of active developers, ranking first.

User activity and financial status:

• The number of daily active accounts for Polkadot in the second quarter fell from 6,290 in the first quarter to the current 5,810.
• Polkadot revenue in the second quarter fell from over $120,000 to nearly $81,000.

Total Value Locked (TVL) in Parachain

• Among the DeFi-focused parachains in the Polkadot ecosystem, the top 6, Moonbeam, Astar, Parallel, Acala, Moonriver, and Karura, dominate.
• The total locked value of the parallel chains experienced a declining trend after a period of increase in the second quarter, dropping from a peak of $236.12 million on April 14 to $146.77 million on June 30.

DOT Staking Rate and Return Rate:

• The staking rate of DOT in the second quarter of 2023 was 46%, below the ideal staking rate.
• The current return rate is approximately 9%, but it varies with changes in the staking rate.

3. Developer Information

According to data released by Electric Capital, in the first half of 2023, Polkadot has a large developer base in the industry. As of September 17, Polkadot currently has 645 full-time developers, ranking second in the number of full-time developers; the total number of developers is 1,923, rising from third to second place, and it has maintained a relatively stable ratio compared to last year, with full-time developers accounting for about 33.54% of the total. These data indicate that the developer community of Polkadot is continuously expanding and plays an important role in the development of the Polkadot ecosystem.

4. Ecological Situation

The Polkadot ecosystem is a rapidly developing and diverse blockchain ecosystem aimed at providing cross-chain interoperability and innovative solutions.

According to PolkaProject statistics, there are currently 580 ecosystem applications related to Polkadot, including DeFi, infrastructure, NFTs, browsers, wallets, forums, etc., developed based on Substrate.

On June 15, the launch of XCM V3 attracted widespread attention, providing advanced programmability, bridging capabilities with external networks, cross-chain locking, an improved fee payment mechanism, and support for non-fungible tokens (NFTs). In terms of Total Value Locked (TVL) in parachains, Moonbeam and Nodle are the two projects with the most active accounts, with Moonbeam consistently being the leader in TVL, while the TVL of other parachains like Acala, Astar, and Parallel also remains at a high level.

Slot auctions are the process of allocating access rights to the relay chain, with the winners gaining the right to operate a parachain. Additionally, the Polkadot ecosystem projects are attracting increasing attention and collaboration, with significant progress made by projects such as Mythical Games, Kilt, Frequency, Composable Finance, and Aventus Network.

Overall, the Polkadot ecosystem is continuously growing and developing, the Roadmap is progressing smoothly, and several key projects have been successfully implemented.

5. Market Capitalization

As of the current date (October 11), Polkadot's market capitalization is approximately $3.375 billion, ranking 14th in the Crypto market. Over the past few months, it has shown a downward trend, with prices relatively stable from early May to mid-June. Overall, in recent months, the price of DOT has dropped by 31.87%.

Polkadot and Cosmos are both committed to solving the cross-chain communication problem but have taken different technical approaches. Compared to Cosmos, the price of ATOM is currently in a relatively low state, having dropped about 27.42% so far this year (except for a brief rebound in June). However, overall, the market capitalization of Cosmos has declined, with a current market cap of approximately $2.598 billion.

The migration of stablecoins to Layer 2 solutions has become a major highlight of 2023, such as Optimism. OP is one of the best-performing crypto projects of 2023, with an increase of up to 227% at the beginning of the year, and Optimism now has a market capitalization of approximately 1 billion USD.

Arbitrum (ARB) is another highly regarded Layer 2 solution, with a transaction volume exceeding $1.7 billion and a current market capitalization of $1 billion.

6. Social Media Situation

The official media of Polkadot currently mainly includes the Polkadot official website, the Kusama network, Polkadot's Twitter, Web3 Foundation's Twitter, Reddit, YouTube, and other channels. The official website provides detailed information about the Polkadot project, including technical documents, news updates, community governance, ecosystem development, and other aspects; social media platforms such as Twitter, Reddit, and Medium are used to publish the latest Polkadot updates and important events, facilitate community communication, and expand influence; YouTube offers video resources such as speeches, technical sharing, and community activities from the Polkadot team, helping users better understand the Polkadot ecosystem.

In addition, there are discussions on technology and the future of Polkadot in forums, platforms like Polkadot GitHub, as well as the Polkadot Support Knowledgebase, which provides tutorial support and assistance for Polkadot. Overall, Polkadot's official social media is quite diverse, offering users various ways to participate and communicate, which is very important for strengthening community consensus and expanding influence.

7. Treasury Governance Situation

OpenGov is a new governance system introduced by Polkadot, which was launched on the Kusama network in November 2022. It has significant advantages in improving governance efficiency and promoting community participation. However, OpenGov also faces some challenges, such as uneven voting rates and rapid treasury spending.

Efficient governance handling: Compared to the original governance system Gov1, OpenGov has improved the operational efficiency of the governance system, allowing for parallel processing of public votes. With a large number of public votes, it greatly enhances governance efficiency.

Currently, there are several issues with OpenGov governance:

The difference in voter turnout is significant: there are obvious disparities in voter turnout for referendums on different tracks, especially for those related to treasury spending, which tend to have lower turnout rates. This could lead to some treasury funds being